01/04/2010 – The Wave Principle: Where The Rubber Hits The Road

The Wave Principle can help you unlock that door. Teaching you
how to do it is the goal of the latest free educational report
from our Club EWI resource center, titled “How
the Wave Principle Can Improve Your Trading.” In
this six-page article, our editorial staff reveals these (and
many more) ways in which the wave model makes up for the ways
ordinary technical methods fall short:

• Technical studies can get you on board a trend, but the Wave
  Principe can say specifically at which point that trend has
  failed — namely, when prices violate critical support or resistance
  levels in your price charts.
• Technical studies can identify the direction of a trend,
  but the Wave Principle can determine how high prices will rally
  or how low they will fall.
• Technical studies can recognize the strength
  of a trend, but the Wave Principle can discern the maturity
  of one; when it’s time to take profits or raise protective stops.
• Technical studies can recognize the strength of a trend, but
  the Wave Principle can discern the maturity of one; when it’s
  time to take profits or raise protective stops.

Now for the fun part: Putting the Wave Principle to use in the
real-time action of a well known market. For this, we turn to
EWI’s chief commodity analyst and long-time Futures Junctures
Service editor Jeffrey Kennedy. (Note: Futures
Junctures Service is a two-part package that includes Daily
Futures Junctures and its long-term sister publication Monthly
Futures Junctures.)

Over the last year, Jeffrey’s timely navigation of the Corn market
showcases the ability of Wave analysis to identify high-probability
trade set-ups. To illustrate, we’ll start with this price chart
of corn since March 2009 (courtesy of ino.com) — punctuated with
brief excerpts from Jeffrey’s Monthly Futures Junctures.

Below are the expanded versions of Jeffrey’s analysis:

June 2009 Monthly Futures Junctures:

“The Party’s Over In Grains: The corrective
advance in corn that began in December 2008 is complete at 450
(basis July). This means that the stage is set for renewed selling
that should push corn prices to below the 2008 low of 325 1/4.
Moreover, considering the manner and extent of the decline since
the early June top, wave patterns argue strongly that this is
an intermediate tradable top.”

September 2009 Monthly Futures Junctures:
Presented an updated chart that showed prices set to embark on
a powerful uptrend above $4 and wrote: “After a Rally,
More Decline.”

January 2010 Monthly Futures Junctures:
Price chart showed wave c of a zigzag coming to an end and wrote:
Wave c = .618 times wave a + wave a at $4.26.